Despite an off day for the market, shares of Jabil Circuit ( JBL) skyrocketed Thursday after the company's revenue and guidance
surpassed Wall Street expectations , and an analyst upgraded the stock to buy. Shares of the electronics manufacturing services company shot up 9.91%, or $3.79, to $42.03 in recent trading. "With consistent top- and bottom-line performance, impressive return on invested capital, careful customer diversification and solid prospects for the balance of fiscal 2006 and beyond, Jabil continues to prove why it is regarded among the upper echelon of the EMS industry," Needham & Co. Analyst Richard Kugele wrote in a research note on Thursday. Kugele noted that Jabil's growth should exceed 30% for fiscal 2006, sustaining a steady 20%-25% growth rate over the next couple of years. He set a 12-month price target of $46. The analyst has received compensation from the company based on a variety of factors, including investment banking. After the bell on Wednesday, Jabil reported that its second-quarter revenue increased 35%, amassing $2.31 billion in revenue, up from $1.7 billion in the same quarter last year. Excluding certain items, the company made $78.7 million, or 37 cents a share, compared with $54.9 million, or 27 cents a share, in the same quarter last year. Jabil also raised its guidance for the third quarter, estimating revenue between $2.5 billion and $2.6 billion, or 43 cents a share. For the full-year, the company forecast earnings of $1.70 on revenue of $9.9 billion. On Thursday, a number of analysts reiterated their buy ratings and heaped glowing praise on the company. "It was an impressive quarter all the way around," said Richard Stice, an equity analyst with Standard & Poor's, who rates the company buy and raised his fiscal 2006 forecast by 2 cents to $1.54 a share. Stice also upped his 12-month target price by $2 to $46.
He was impressed with the company's level of execution, new customer additions and diversified revenue base. He said the consumer market continues to be a big driver of growth, and added that Jabil is gaining share in the medical and instrumentation sector, which made up 17% of revenue for the quarter. "That speaks to the fact that their model is becoming more diversified and they're becoming more entrenched in a faster growing market -- faster than traditional EMS," Stice said. Standard & Poor's does not have a stake in Jabil and does not do any investment banking. Matthew Sheerin, an analyst with Thomas Weisel Partners, maintained his outperform rating on the stock and raised revenue and earnings estimates for fiscal 2006 from $9.38 billion and $1.67 to $10.1 billion and $1.72, respectively. "We see no signs of this growth engine slowing," Sheerin wrote in a research note on Wednesday. He noted that Nokia ( NOK) is driving much of the growth in the consumer market and, in addition, Jabil has solid opportunities in the medical, industrial and computing markets. Thomas Weisel does and seeks to do business with the companies it covers. Analysts also noted that Jabil's acquisition of India-based Celetronix, to be completed in the coming weeks, will help bolster the consumer market, given its strong position in set-top boxes. The deal "is going to give them better traction within the Indian market," Stice said. "From a geographic standpoint, that will be helpful."